We have
audited the accompanying balance sheets of Windstream Technologies, Inc. (the “Company”) as of December 31, 2012 and
2011 and the related statements of operations, changes in stockholders’ deficit and cash flows for the years then ended.
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion
on these financial statements based on our audits.

We conducted
our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatements. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.

In our opinion,
the financial statements referred to above present fairly, in all material respects, the financial position of the Company as
of December 31, 2012 and 2011, and the results of its operations and its cash flows for the years then ended in conformity with
accounting principles generally accepted in the United States of America.

The accompanying
financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to
the financial statements, the Company has suffered recurring losses from operations and has a working capital deficit. These conditions
raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards
to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from
the outcome of this uncertainty.

/s/ MaloneBailey, LLP

www.malone−bailey.com

Houston, Texas

August 16, 2013

(1)

WINDSTREAM TECHNOLOGIES,
INC. FINANCIALS

WINDSTREAM TECHNOLOGIES,
INC.

BALANCE SHEETS

ASSETS

March 31, 2013

December 31,

December 31,

(unaudited)

2012

2011

CURRENT ASSETS

Cash

$

126,616

$

4,022

$

206,108

Accounts receivable

153,068

24,933

7,100

Inventories

309,182

295,023

—

Prepaid expenses

77,717

77,717

40,500

TOTAL CURRENT ASSETS

666,583

401,695

253,708

Property and equipment, net of accumulated depreciation
of $244,085, $202,303

The accompanying notes are an integral
part of these financial statements

(2)

WINDSTREAM TECHNOLOGIES,
INC.

STATEMENTS OF OPERATIONS

For
the Three Months Ended March 31, 2013

For
the Three Months Ended March 31, 2012

For
the Year Ended December 31,

For
the Year Ended December 31,

(unaudited)

(unaudited)

2012

2011

SALES

$

356,749

$

85,040

$

237,237

$

—

COST OF GOODS SOLD

227,448

122,791

428,374

—

GROSS PROFIT

129,301

(37,751

)

(191,137

)

—

OPERATING EXPENSES:

Research and development

—

654,253

1,181,094

1,627,132

General and administrative
expenses

309,196

333,499

1,525,535

1,072,885

TOTAL OPERATING EXPENSES

309,196

987,752

2,706,629

2,700,017

LOSS FROM OPERATIONS

(179,895

)

(1,025,503

)

(2,897,766

)

(2,700,017

)

OTHER INCOME (EXPENSE)

Grant income

—

—

600,000

1,000,000

Other income

—

—

5,915

12,215

Interest expense,
net

(39,321

)

(20,618

)

(172,167

)

(93,508

)

TOTAL OTHER INCOME (EXPENSE)

(39,321

)

(20,618

)

433,748

918,707

NET LOSS

$

(219,216

)

$

(1,046,121

)

$

(2,464,018

)

$

(1,781,310

)

Net Loss Per Share - Basic and Diluted

$

(0.23

)

$

(1.10

)

$

(2.58

)

$

(1.87

)

Weighted Average Shares Outstanding - Basic and Diluted

955,000

955,000

955,000

955,000

The accompanying notes are an integral
part of these financial statements

(3)

WINDSTREAM TECHNOLOGIES,
INC.

STATEMENTS OF CASH FLOWS

For the

For the

Three Months

Three Months

Ended

Ended

For the Year

For the Year

March 31,

March 31,

Ended

Ended

2013

2012

December 31,

December 31,

(unaudited)

(unaudited)

2012

2011

CASH FLOWS FROM
OPERATING ACTIVITIES:

Net loss

$

(219,216

)

$

(1,046,121

)

$

(2,464,018

)

$

(1,781,310

)

Adjustments to reconcile net income to net cash

used in operating activities:

Depreciation

41,782

37,364

157,808

38,305

Stock option expenses

39,897

39,898

159,593

101,678

Changes in operating Assets and Liabilites:

Accounts receivables

(128,135

)

(85,247

)

(17,833

)

(7,100

)

Prepaid expenses

—

—

(37,217

)

(40,500

)

Inventory

(14,159

)

—

(295,023

)

—

Other assets

—

—

—

(7,500

)

Accounts payable

(6,715

)

294,148

501,128

214,116

Accounts payable related parties

7,435

—

41,705

—

Accrued liabilities

128,135

(8,942

)

469,747

62,461

Deferred rent

3,142

—

13,901

9,412

Deferred revenue

129,959

—

102,428

—

NET CASH USED IN OPERATING ACTIVITIES

(17,875

)

(768,900

)

(1,367,781

)

(1,410,438

)

CASH FLOWS FROM INVESTING ACTIVITIES:

Cash paid for purchase of fixed assets

(531

)

(35,131

)

(27,055

)

(340,733

)

NET CASH USED BY INVESTING ACTIVITIES

(531

)

(35,131

)

(27,055

)

(340,733

)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from short term debt

90,000

100,000

769,750

350,000

Principal payments on short term debt

—

—

(520,000

)

(100,000

)

Proceeds from note payable

—

—

—

1,400,000

Proceeds from short term debt - related
parties

61,000

100,000

303,000

100,000

Payments on short term debt - related
parties

(10,000

)

—

(50,000

)

(100,000

)

Proceeds from issuance of Series A
Preferred Stock

—

410,000

690,000

—

NET CASH PROVIDED BY FINANCING ACTIVITIES

141,000

610,000

1,192,750

1,650,000

NET INCREASE (DECREASE) IN CASH

122,594

(194,031

)

(202,086

)

(101,171

)

CASH, Beginning of Period

4,022

206,108

206,108

307,279

CASH, End of Period

$

126,616

$

12,077

$

4,022

$

206,108

SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:

Cash paid during the year for:

Interest

6,490

1,920

68,257

10,759

Income
taxes

—

—

—

—

NON CASH INVESTING AND FINANCING
ACTIVITIES

Conversion of debt and accrued interest
into Seed 2 Preferred Shares

—

—

—

546,353

Fixed assets purchase on credit

—

—

58,941

231,253

Series A Preferred shares issued to settle accrued
expenses

—

—

50,000

—

The accompanying notes are an integral
part of these financial statements

(4)

WINDSTREAM TECHNOLOGIES,
INC

STATEMENTS OF CHANGES
STOCKHOLDERS’ DEFICIT

Series A Preferred Shares

Seed 1 Preferred Shares

Seed 2 Preferred Shares

Common Stock

Additional

Accumulated

Shares

Amount

Shares

Amount

Shares

Amount

Shares

Amount

Paid
in Capital

Deficit

Total

Balance - December 31, 2010

—

$

—

35,000

$

35,000

297,336

$

975,000

955,000

$

3,132

$

80,477

$

(1,390,791

)

$

(297,182

)

Seed 2 Preferred shares issued upon conversion of convertible debt

—

—

—

—

166,572

546,353

—

—

—

—

546,353

Stock option expense

—

—

—

—

—

—

—

—

101,678

—

101,678

Not loss for the year

—

—

—

—

—

—

—

—

—

(1,781,310

)

(1,781,310

)

Balance - December 31, 2011

—

—

35,000

35,000

463,908

1,521,353

955,000

3,132

182,155

(3,172,101

)

(1,430,461

)

Series A Preferred shares issued for cash

77,441

690,000

—

—

—

—

—

—

—

—

690,000

Series A Preferred shares issued for accrued expenses

5,612

50,000

—

—

—

—

—

—

—

—

50,000

Stock option expense

—

—

—

—

—

—

—

—

159,593

—

159,593

Not loss for the year

—

—

—

—

—

—

—

—

—

(2,464,018

)

(2,464,018

)

Balance - December 31, 2012

83,053

740,000

35,000

35,000

463,908

1,521,353

955,000

3,132

341,748

(5,636,119

)

(2,994,886

)

Stock option expense

—

—

—

—

—

—

—

—

39,897

—

39,897

Not loss for the three months ended

—

—

—

—

—

—

—

—

—

(219,216

)

(219,216

)

Balance - March 31, 2013 (unaudited)

83,053

$

740,000

35,000

$

35,000

463,908

$

1,521,353

955,000

$

3,132

$

381,645

$

(5,855,335

)

$

(3,174,205

)

The
accompanying notes are an integral part of these financial statements

(5)

NOTE
1 – NATURE OF ORGANIZATION

Nature
of Activities

Windstream
Technologies, Inc. (the “Company”) was incorporated in California on July 21, 2008. The Company is engaged in the
development and commercialization of wind driven electrical generation equipment. The Company has facilities in Indiana.

NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis
of Presentation and Fiscal Year

These
financial statements have been presented by the Company in accordance with accounting principles generally accepted in the United
States and are expressed in U.S. dollars. The Company’s fiscal year-end is December 31.

Use
of Estimates

The
preparation of these financial statements in accordance with United States generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses in the reporting period. The Company regularly evaluates estimates and assumptions
related to recoverability of long-lived assets, and deferred income tax asset valuations. The Company bases its estimates and
assumptions on current facts, historical experience and various other factors that it believes to be reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and liabilities and the accrual of
costs and expenses that are not readily apparent from other sources. The actual results experienced by the Company may differ
materially and adversely from the Company’s estimates. To the extent there are material differences between estimates and
the actual results, future results of operations will be affected.

Financial
Instruments

The
Company’s financial instruments consist principally of cash, accounts receivable, inventory, accounts payable, notes payable
and related party debts. The Company believes that the recorded values of all of other financial instruments approximate their
current fair values because of their nature and respective maturity dates or durations.

Cash
and Cash Equivalents

The
Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents.

Accounts
Receivable

Trade
accounts receivable are periodically evaluated for collectability based on past credit history with customers and their current
financial condition. Bad debts expense or write offs of receivables are determined on the basis of loss experience, known and
inherent risks in the receivable portfolio and current economic conditions. There have been no write-offs during the various periods
being reported on.

Inventories

Inventories
are primarily raw materials. Inventories are valued at the lower of, cost as determined on a first-in-first-out (FIFO) basis,
or market. Market value is determined by reference to selling prices after the balance sheet date or to management’s estimates
based on prevailing market conditions. Management writes down the inventories to market value if it is below cost. Management
also regularly evaluates the composition of its inventories to identify slow-moving and obsolete inventories to determine if valuation
allowance is required. Costs of raw material inventories include purchase and related costs incurred in bringing the products
to their present location and condition.

Property
and Equipment

Property
and equipment consists of manufacturing equipment, factory equipment, furniture and fixtures, leasehold improvements and tooling
costs. These assets are recorded at cost and are being amortized on the straight-line basis over estimated lives of two to seven
years. Repair and maintenance expenditures, which do not result in improvements, are charged to expense as incurred.

Long
–Lived Assets

In
accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)
360, Property, Plant and Equipment, the Company tests long-lived assets or asset groups for recoverability when events
or changes in circumstances indicated that their carrying amount may not be recoverable. Circumstances which could trigger a review
include, but are not limited to: significant decreases in the market price of the asset; significant adverse changes in the business
climate or legal factors; accumulation of costs significantly in excess of the amount originally expected for the acquisition
or construction of the asset; current period cash flow or operating losses combined with a history of losses or a forecast of
continuing losses associated with the use of the asset; and a current expectation that the asset will more likely than not be
sold or disposed significantly before the end of its estimated useful life.

Recoverability
is assessed based on the carrying amount of the asset and its fair value which is generally determined based on the sum of the
undiscounted cash flows expected to result from the use and the eventual disposal of the asset, as well as specific appraisal
in certain instances. An impairment loss is recognized when the carrying amount is not recoverable and exceeds fair value. No
impairment losses were recognized for the years ended December 31, 2012 and 2011 and the three months ended March 31, 2013 and
2012.

Deferred
Revenues

The
Company typically receives advance payments on certain individual sales. These advance payments are recorded as deferred revenue
on the balance sheets and reclassified as revenue on the statement of operations only after the product has been delivered and
the revenue has been earned.

Revenue
Recognition

Sales
revenue consists of amounts earned from customers through the sale of its primary products, the TurboMill and the SolarMill, power
generation devices, which use alternative energy sources, primarily wind, to generate electricity. The Company also provides accessory
products in support of these devices in the form of mounting equipment, data collection/monitoring equipment, batteries,
inverters and various wiring solutions and accessories.

Grant
income stems from the company’s participation in local and state manufacturing incentive programs.

Sales
revenue is recognized when persuasive evidence of an arrangement exists, title to and risk of loss for the product has passed,
which is generally when the products are shipped to its customers and collection is reasonably assured.

Grant
income is recorded when received.

Cost
of goods sold

Cost
of goods sold consists primarily of raw materials, utility and supply costs consumed in the manufacturing process, manufacturing
labor, depreciation expense and direct overhead expenses necessary to manufacture finished goods as well as warehousing and distribution
costs such as inbound freight charges, shipping and handling costs, purchasing and receiving costs.

Income
Taxes

In
accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. Under
the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the
financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A
valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be
realized.

The
Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income
taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority
would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold,
the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of
being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded
as of December 31, 2012 and 2011.

Stock
Based Payments

We
account for share-based awards to employees in accordance with ASC 718 “Stock Compensation”. Under this guidance,
stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense
over the estimated service period (generally the vesting period) on the straight-line attribute method. Share-based awards to
non-employees are accounted for in accordance with ASC 505-50 “Equity”, wherein such awards are expensed over the
period in which the related services are rendered.

Embedded
conversion features

The
Company evaluates embedded conversion features within convertible debt and convertible preferred stock under ASC 815 “Derivatives
and Hedging” to determine whether the embedded conversion feature should be bifurcated from the host instrument and accounted
for as a derivative at fair value with changes in fair value recorded in earnings. If the conversion feature does not require
derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options”
for consideration of any beneficial conversion feature.

Research
and Development

Costs
incurred in developing the ability to create and manufacture products for sale are included in research and development. Once
a product is commercially feasible and starts to sell to third party customers, the classification of such costs as development
costs stops and such costs are recorded as costs of production, which is included in cost of goods sold. Research and development
costs are expensed when incurred.

(6)

Basic
and Diluted Net Loss per Share

The
Company computes loss per share in accordance with ASC 260, Earnings per Share. ASC 260 requires presentation of both basic
and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net
loss available to common shareholders (numerator) by the weighted average number of common shares outstanding (denominator) during
the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period including stock options,
using treasury stock method, and convertible preferred stock using the if-converted method. In computing diluted EPS, the average
stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options
or warrants. Diluted EPS excludes all dilutive potential common shares if their effect is anti-dilutive. Common stock equivalents
pertaining to the convertible debt, options, warrants and convertible preferred shares were not included in the computation of
diluted net loss per common share because the effect would have been anti-dilutive due to the net loss for the years ended December
31, 2012 and 2011 and for the three months ended March 31, 2013 and 2012, respectively.

Concentration
of Credit Risk

Financial
instruments which potentially subject the Company to concentrations of credit risk consist of cash and trade receivables. The
Company places its cash with high credit quality financial institutions. At times such cash may be in excess of the FDIC limit.
With respect to trade receivables, the Company routinely assesses the financial strength of its customers and, as a consequence,
believes that the receivable credit risk exposure is limited.

Related
parties

A
party is considered to be related to the Company if the party directly or indirectly or through one or more intermediaries, controls,
is controlled by, or is under common control with the Company. Related parties also include principal owners of the Company, its
management, members of the immediate families of principal owners of the Company and its management and other parties with which
the Company may deal if one party controls or can significantly influence the management or operating policies of the other to
an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. A party which
can significantly influence the management or operating policies of the transacting parties or if it has an ownership interest
in one of the transacting parties and can significantly influence the other to an extent that one or more of the transacting parties
might be prevented from fully pursuing its own separate interests is also a related party.

Fair
Value Measurements

As
defined in ASC 820 “Fair Value Measurements”, fair value is the price that would be received to sell an asset or paid
to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Company
utilizes market data or assumptions that market participants would use in pricing the asset or liability, including assumptions
about risk and the risks inherent in the inputs to the valuation technique. These inputs can be readily observable, market corroborated,
or generally unobservable. The Company classifies fair value balances based on the observability of those inputs. ASC 820 establishes
a fair value hierarchy that prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted
quoted prices in active markets for identical assets or liabilities (level 1 measurement) and the lowest priority to unobservable
inputs (level 3 measurement).

The
three levels of the fair value hierarchy defined by ASC 820 are as follows:

Level
1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets
are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information
on an ongoing basis. Level 1 primarily consists of financial instruments such as exchange-traded derivatives, marketable securities
and listed equities.

Level
2 – Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly
observable as of the reported date. Level 2 includes those financial instruments that are valued using models or other valuation
methodologies. These models are primarily industry standard models that consider various assumptions, including quoted forward
prices for commodities, time value, volatility factors, and current market and contractual prices for the underlying instruments,
as well as other relevant economic measures. Substantially all of these assumptions are observable in the marketplace throughout
the full term of the instrument, can be derived from observable data or are supported by observable levels at which transactions
are executed in the marketplace. Instruments in this category generally include non-exchange-traded derivatives such as commodity
swaps, interest rate swaps, options and collars.

Level
3 – Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may
be used with internally developed methodologies that result in management’s best estimate of fair value.

Recently
Adopted Accounting Pronouncements

The
Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and
does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial
position or results of operations.

(7)

NOTE
3 – GOING CONCERN

The
accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and
satisfaction of liabilities in the normal course of business. Since inception, the Company has incurred losses and has negative
working capital. In addition, the Company generated negative cash flow from operations. These factors, among others, raise substantial
doubt about the Company’s ability to continue as a going concern for a reasonable period of time.

If
necessary, the Company will pursue additional equity and/or debt financing while managing cash flows from operations in an effort
to provide funds to meet its obligations on a timely basis and to support future business development.

The
financial statements do not contain any adjustments to reflect the possible future effects on the classification of assets or
the amounts and classification of liabilities that may result should the Company be unable to continue as a going concern.

NOTE
4 – PREPAID EXPENSES

Prepaid
expenses as of March 31, 2013, December 31, 2012 and 2011 refer to advance payments for inventory purchases.

NOTE
5 – PROPERTY AND EQUIPMENT

Property
and equipment consists of the following as of:

March
31, 2013

December
31, 2012

December
31, 2011

Equipment

$

125,039

$

125,039

$

119,539

Factory equipment

15,800

15,800

15,800

Furniture and fixtures

7,888

7,888

7,888

Leasehold improvements

64,582

64,582

51,806

Tooling

477,467

476,936

409,216

Total

690,776

690,245

604,249

Less accumulated depreciation

(244,085)

(202,303)

(44,495)

Net property, plant and equipment

$

446,691

$

487,942

$

559,754

Depreciation
expense for the periods ended as follows amounted to:

March
31,

2013

March
31,

2012

December
31, 2012

December
31,
2011

Depreciation Expense

$ 41,782

$ 37,364

$ 157,808

$ 38,305

NOTE
6 – SHORT TERM DEBT

On
various dates in 2011, the Company issued notes totaling to $450,000 of which $100,000 was to a related party (member of the Board
of Directors). The notes bear interest ranging from 8% to 18% and are due on demand. During the year ended December 31, 2011,
the Company fully repaid $200,000 of the existing notes, including the note issued to the related party. As of December 31, 2011
and 2012, the outstanding balance on the above notes amounted to $250,000.

On
various dates in 2012, the Company issued notes totaling to $1,072,750 of which $303,000 were to related parties (Company President
and a member of the Board of Director). The notes bear interest ranging from 5% to 18%. Except for three notes totaling to $420,000
which have a term ranging from 1 to 3 months, the remaining notes are due on demand. During the year ended December 31, 2012,
the Company fully repaid $570,000 of the existing notes, including a partial payment of $50,000 for a note issued to a related
party. As of December 31, 2012, the outstanding balance on the above notes amounted to $502,750.

During
the three months ended March 31, 2013, the Company president advanced to the Company an additional $61,000 to fund operations.
The Company subsequently repaid $10,000 of the total amount that was advanced.

On
February 25, 2013, the Company entered into a working capital revolving line of credit with a bank, with a credit limit of $500,000,
for use in financing overseas sales of the Company’s products. The Company’s draws under the line are transaction
specific and are guaranteed by the Export Import Bank, a U.S. government entity. Draw downs on the line are used to meet the working
capital needs of the Company to purchase materials and fund the labor and overhead to manufacture specific products for export
to specific customers. The line accrues interest at a fixed rate of 6.6% and expires in March 2014. At March 31, 2013, the outstanding
balance on the line was $90,000.

A
summary of debt activity during the periods presented is set forth below:

Third parties

Related parties

Proceeds
from short term notes

Repayments
of
short
term
notes

$
350,000

(100,000)

$
100,000

(100,000)

Balance at December 31, 2011

$

250,000

$

—

Proceeds
from short term notes

Repayments
of
short
term
notes

769,750

(520,000)

303,000

(50,000)

Balance at December 31, 2012

$

499,750

$

253,000

Draw downs from line of credit

90,000

-

Proceeds from short term notes

-

61,000

Repayment of short term notes

-

(10,000)

Balance at March 31,
2013

$

589,750

$

304,000

(8)

NOTE
7 - NOTE PAYABLE

In
July 2011, the Company entered into a $1,400,000 note agreement with the City of North Vernon, Indiana. Interest accrues at 5.5%
and the note matures on August 1, 2016. As of March 31, 2013 and December 31, 2012 and 2011, the full amount of the note was outstanding.

Interest
and principal payments are expected to be paid as follows:

2013

$ 234,303

2014

$ 234,303

2015

$ 234,303

2016

$ 1,182,351

The
Company was unable to pay the interest and principal payments due on August 1, 2012 and is in default of such payment. The
Company was able to negotiate payment terms with the City of North Vernon, Indiana, which allowed the Company to delay scheduled
repayments of the loan

In
May 2013, the Company made a $25,000 principal payment.

NOTE
8 – CONVERTIBLE NOTE PAYABLE

On
September 15, 2010, the Company received proceeds from a note payable in the amount of $500,000 from a third party. The note bore
interest at 8% and was due in full on September 15, 2012. The note was convertible to shares of the Company’s common stock
at $3.28 per share. On November 12, 2011, the note holder converted the note as well as $46,353 of accrued interest to 166,572
shares of Seed 2 preferred stock. As of March 31, 2013 and December 31, 2012 and 2011, no amounts were outstanding under this
note.

NOTE
9 – RELATED PARTY TRANSACTIONS

As
of March 31, 2013, the Company owed $49,140 to the Company president for expenses incurred on behalf of the Company. As of December
31, 2012, the balance due for expenses incurred was $41,705. These amounts are non-interest bearing, unsecured and due on demand.

NOTE
10 – COMMON STOCK AND PREFERRED STOCK

Common
Stock

The
Company has 9,000,000 shares of common stock authorized and 955,000 shares were issued and outstanding as of March 31, 2013 and
December 31, 2012 and 2011.

The
holders of common stock have dividend rights, liquidation rights and voting rights of one vote for each share of common stock.

In
January 2010, the Company issued fully vested 955,000 common shares to employees for services provided to the Company and recorded
the stock-based compensation of $3,132, which is equivalent to the fair value of the shares at the date of the grant.

Convertible
Preferred Stock

The
Company has 1,035,000 total shares of preferred stock authorized in the following classes:

Seed
1 Preferred Stock 35,000 shares authorized

Seed
2 Preferred Stock 500,000 shares authorized

Series
A Preferred Stock 500,000 shares authorized

The
holders of all classes of preferred stock are entitled to receive noncumulative dividends at the following rates:

Seed
1 Preferred Stock $.08 per share per annum

Seed
2 Preferred Stock $.2624 per share per annum

Series A Preferred Stock $.7128 per share per annum

The
holders of all preferred shares have the right to vote for each share of common stock into which such share of preferred stock
could then be converted.

Each
share of each series of preferred stock is convertible, at the option of the holder thereof, into such number of fully paid and
nonassessable shares of common stock as determined by dividing the original issue price for each such series of preferred stock
by the conversion price applicable to such in effect on the date the certificate is surrendered for conversion.

In
fiscal years 2008 and 2009, the Company issued 10,000 shares of Seed 1 Preferred Stock to settle a debt with a balance of $10,000
and 25,000 shares for cash at $1.00 per share for total gross proceeds of $25,000.

In
fiscal years 2009 and 2010 the Company issued 297,636 shares of Seed 2 Preferred Stock for cash at $3.28 per share for total gross
proceeds of $975,000.

On
November 12, 2011, the Company issued 166,572 shares of Seed 2 Preferred Stock in order settle a $500,000 convertible note and
$46,353 of accrued interest.

In
fiscal year 2012, the Company issued 77,441 shares of Series A Preferred stock for cash at $8.91 per share for total gross proceeds
of $690,000. An additional 5,612 of Series A Preferred stock were issued to a vendor to settle $50,000 in outstanding trade payables.

NOTE
11 – STOCK OPTIONS

In
fiscal 2010, the Company issued 172,500 options to purchase common stock to various employees for services rendered. These options
were granted with an exercise price ranging from $0.65 to $0.90 per share, have a contract term of ten years and are vested for
a period of five years or immediately. The options have a fair value of $565,770 which was calculated using the Black-Scholes
option pricing model.

In
fiscal 2012, the Company issued 32,500 options to purchase common stock to various employees and consultants for services rendered.
These options were granted with an exercise price of $.90 per share, have a contract term of ten years and are vested for a period
of five years. The options have a fair value of $289,572 which was calculated using the Black-Scholes option pricing model.

Stock
option activity is presented in the table below:

Number of Shares

Weighted average Exercise
Price

Weight average Contractual
Term (years)

Aggregate Intrinsic
Value

Outstanding
at December 31, 2010

172,500

0.83

9.75

—

Granted

—

—

—

—

Outstanding
at December 31, 2011

172,500

0.83

8.75

—

Granted

32,500

0.9

10.00

—

Outstanding
at December 31, 2012

205,000

0.85

7.95

—

The
Company recognized stock compensation expense as follows for all periods presented:

Three
months
ended

March 31, 2013

$ 39,897

Three months ended

March 31, 2012

$ 39,898

Year ended

December 31, 2012

$ 159,593

Year ended

December 31, 2011

$ 101,678

The
fair value of the options granted during the various periods was estimated at the date of grant using the Black-Scholes option-pricing
model and the following assumptions:

Year
Options were granted

2012

2010

Market value of stock
on grant date

8.91

3.28

Risk-free interest rate

1.39%

1.54 to 3.14%

Dividend Yield

0%

0%

Volatility Factor

300%

300%

Weighted average expected life

7.5 years

5 to 7.5 years

Expected forfeiture rate

0%

0%

(9)

NOTE
12 – COMMITMENTS AND CONTINGENCIES

Leases

The
Company leases various facilities under a non-cancelable operating lease expiring on September 30, 2013. The current minimum monthly
rental payment is $4,750 plus various expenses incidental to use of the property. The Company has an option to extend the lease
for one twelve month period at slightly higher monthly rent.

The
Company also leases a research facility in New Albany, Indiana under a sixty-five month lease expiring March 30, 2015. The Company
evaluated the lease under FASB ASC 840-20 “Operating Leases” and notes that the lease qualifies as an escalating lease.
Therefore, rent expense was calculated on a straight-line basis, and was determined to be $3,124 per month. The Company’s
deferred rent liability for the three month period ended March 31, 2013 and for the years ended December 31, 2012 and December
31, 2011 were $64,240, $61,098, and $47,197, respectively.

Future
minimum lease commitments at December 31, 2012 are as follows:

2013

$ 88,910

2014

$ 58,624

2015

$ 15,479

Total

$ 163,013

Rent
expense for all periods presented are as follows:

Three months ended

March 31, 2013

$ 44,263

Three months ended

March 31, 2012

$ 37,618

Year ended

December 31, 2012

$ 95,981

Year ended

December 31, 2011

$ 51,741

Litigations

Various
lawsuits, claims and other contingencies arise in the ordinary course of the Company’s business activities. While the ultimate
outcome of the aforementioned contingencies are not determinable at this time, management believes that any liability or loss
resulting therefrom will not materially affect the financial position, result of operations or cash flows of the Company.

NOTE
13 – INCOME TAXES

The
Company uses the liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences
of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes.

During
the three months ended March 31, 2013 and the years ended December 31, 2012 and 2011, the Company incurred net losses, and, therefore,
had no tax liability. The net deferred asset generated by the loss carry-forward has been fully reserved. Thecumulative
net operating loss carry-forward is approximately $2,465,962, $2,287,301 and $54,157, respectively as of March 31, 2013, December
31, 2012 and 2011, and will expire in years 2020 through 2032.

Deferred
tax assets consist of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred
tax assets because of the uncertainty regarding its realizability.

As
of March 31, 2013, December 31, 2012 and 2011, deferred tax assets consisted of the following:

March 31, 2013

December 31,

2012

2011

(Unaudited)

Net operating
loss carryforwards

$

863,087

$

800,556

$

18,955

Valuation
allowance

(863,087)

(800,556)

(18,955)

$

-

$

-

$

-

NOTE
14 – MAJOR CUSTOMERS

During
the three months ended March 31, 2013, three customers accounted for 100% of revenue.

During
the same period in 2012, two customers accounted for 55.8% of revenues.

For
the year ended December 31, 2012, two customers accounted for 67.93% of revenue.

NOTE
15 – SUBSEQUENT EVENTS

On
May 22, 2013 (“Closing Date”), Windaus Global Technology, Inc. (“Windaus”) entered into a “Share
Exchange Agreement” (“the Agreement”) by and among, Windaus and the Company and certain shareholders of the
Company. Pursuant to the Agreement, Windaus agreed to exchange the outstanding common and preferred stock of the Company held
by the Company shareholders for common shares of common stock in Windaus on approximately a 1:25.80 basis. At the Closing Date,
there were approximately 955,000 shares of the Company’s common stock and 581,961 shares of the Company’s preferred
stock outstanding. In addition, shares issuable under outstanding options of the Company will be exercisable into shares of common
stock of Windaus, pursuant to the terms of such instruments. The shares of the Company’s common stock and preferred stock
will be exchanged for approximately 39,665,899 new shares of Windaus common stock, par value of $0.001 per share. Also 13,410,972
shares will be reserved for options to be exercised in the future under the Company’s stock option plan. At the closing,
Windaus had approximately 24,000,000 shares of common stock issued and outstanding and no preferred stock. As of the date of the
filing of Windaus most recent Form 8-K, the holders of the majority shares of common and preferred stock of the Company have exchanged
their shares into a majority of the issued and outstanding shares of Windaus’ common stock. As a result of the Agreement,
and other transactions contemplated by Windaus, the Company is now a majority owned subsidiary of Windaus and the transaction
is expected to be accounted for as a reverse merger.

Between April 1, 2013 and May 30, 2013, the
Company president advanced the Company an additional $1,000 to fund operations. The Company subsequently repaid $17,500 of the
total amount that was advanced.

In
May 2013, the company issued 4.36 million common shares for consulting services.

On
June 1, 2013, WindStream entered into subscriptions agreements with five accredited investors for the issuance of
convertible promissory notes in the aggregate principal amount of $550,000, which are convertible into shares of common stock
of the Company at $0.25 per share, and warrants entitling the holder to purchase up to an aggregate of 1,600,000 of shares of
common stock of the Company at $0.25 per share. The notes bear interest at 8% and are due in one year. In connection with one
of the five debt issuances, the company paid finder’s fees of $42,000 as well as 140,000 common stock warrants at$0.05
per share. All warrants vest immediately and have a term of three years.

On
July 4, 2013, the Company entered into subscription agreements with an accredited investor for the issuance of 5,000,000 shares
of common stock at $0.05 per share, for an aggregate purchase price of $250,000.

In
July 2013, the Company entered into subscription agreements with accredited investors for the issuance of 1,800,000 shares
at $0.25 per share together with warrants to purchase 1,500,000 shares at $0.50 per share for an aggregate purchase price of
$450,000. The warrantes vest immediately and have a term of three years.

On
August 5, 2013, the Company entered into subscription agreements with an accredited investor for the issuance of 200,000
shares at $0.25 per share together with warrants to purchase 50,000 shares at $0.50 per share for an aggregate purchase price
of $50,000. The warrants vest immediately and have a term of three years.

In
August, 2013, the Company issued warrants to various investors entitling the holders to purchase up to an aggregate of
1,100,000 of shares of common stock of the Company at $0.25 per share. The warrants vest immediately and have a term
of three years,

Windaus Global Energy, Inc. entered into a Share Exchange Agreement with WindStream Technologies,
Inc., whereby Windaus Global Energy, Inc. exchanged 69.2% of its outstanding shares of common stock for 100% of the outstanding
shares of WindStream Technologies, Ltd. common stock and preferred stock. As of the closing date, WindStream Technologies,
Ltd. will operate as a wholly owned subsidiary of Windaus Global Energy, Inc.

As a result of the Share Exchange Agreement, each outstanding share of WindStream Technologies,
Ltd. common stock and preferred stock shall be transferred, conveyed and delivered to Windaus Global Energy, Inc. in exchange
for 39,665,899 newly-issued shares of common stock of Windaus Global Energy, Inc.

As of the closing date of the Share Exchange Agreement, the former shareholders of WindStream
Technologies, Inc. held approximately 62.3% of the issued and outstanding common shares of Windaus Global Energy, Inc. The
issuance of 39,665,899 common shares to the former shareholders of WindStream Technologies, Inc. was deemed to be an acquisition
for accounting purposes. The number of shares outstanding and per share amounts have been restated to recognize
the recapitalization as reflected in proforma adjustments.

The proforma consolidated balance sheets of Windaus Global Energy, Inc. and WindStream Technologies,
Inc. are presented here as of March 31, 2013. The proforma consolidated statements of operations for
Windaus Global Energy, Inc. and WindStream Technologies, Inc. are presented here as of the year ended December 31, 2012 and
the three months ended March 31, 2013.